Disbarment is the
appropriate disciplinary sanction for an attorney who (1) violated Minn. R. Prof. Conduct 8.4(c) by converting rent payments
and sale proceeds that were due a client, inducing the client to transfer the
client’s property interest to the attorney’s spouse, making false statements to
the client and a third party, and falsely drafting, notarizing, and signing
documents; and (2) violated Minn. R. Prof. Conduct 1.8(a) by engaging in
business transactions with a client on unreasonable and undisclosed terms,
without advising the client in writing to seek independent legal counsel, and
without obtaining the client’s written consent to the transactions.

Disbarred.

Heard, considered, and
decided by the court en banc.

O P
I N I O N

PER CURIAM.

This attorney
discipline case arises out of a petition filed by the Director of the Office of
Lawyers Professional Responsibility against respondent Michael F. Swensen, who
was admitted to practice law in Minnesota on May 10, 1991. By order filed on
July 23, 2007, we deemed the allegations of the petition admitted. Based on
those allegations, we conclude that respondent violated Minn. R. Prof. Conduct 8.4(c)
and 1.8(a) and that his misconduct warrants
disbarment.

The Mound Property

Respondent
represented L.J. in various real estate transactions from 1999 to 2004. Respondent
and his wife, attorney Patricia Ryerson,[1]
advised L.J. to purchase an investment property located in Mound, Minnesota. Respondent
and Ryerson proposed to L.J. that they would renovate the property and split
the profits with her upon resale. L.J. purchased the property on May 19, 1999,
for $235,000, and she later spent $63,744.11 on repairs and supplies. L.J.
requested that the property be resold as initially agreed, but respondent and
Ryerson repeatedly assured her that they would obtain refinancing for the
property and purchase her interest. Respondent and Ryerson rented out the
property beginning in September 1999, the proceeds from which were to be used
to pay the mortgage. Instead, respondent and Ryerson converted the rental
income to their own use.

The property was foreclosed in February 2003 and purchased
by an assignee of the mortgagee at a sheriff’s sale the following month. Respondent
told L.J. that he and Ryerson had obtained refinancing for the property, and he
and Ryerson asked her to attend a closing on September 23, 2003. It was at the
September 23 closing that L.J. first learned that the property was in
foreclosure, that the redemption period would expire on September 27, and that
the proposed “refinancing” consisted of selling the property to Mark O’Brien. L.J.
initially objected to the transaction, but respondent and Ryerson convinced her
that the sale was the only means of avoiding loss of her entire interest upon
expiration of the redemption period. L.J. sold the property to Mark O’Brien on
September 26, 2003. Although the stated purchase price was $345,000, O’Brien received
a $69,000 “seller’s equity gift” to which L.J. neither knowingly nor willingly
agreed. The September 26 sale netted $56,778.33, $45,000 of which was paid to L.J.
and $11,778.33 of which was paid to VR Construction, a company belonging to
Ryerson that had no legal interest in the property.

The Minneapolis Property

Respondent and Ryerson also advised L.J. in 1999 to
purchase an investment property located in Minneapolis. The two attorneys proposed
that L.J. fund the purchase and renovation of the property and that they renovate
the property and obtain refinancing in order to purchase L.J.’s interest. Respondent
and Ryerson told L.J. that the investment would reduce her overall tax burden.
L.J. purchased the property for $910,000 on September 23, 1999, and she later
contributed an additional $48,000 to pay for property improvements.

Ryerson directed L.J. to sign a blank quit claim deed
to the Minneapolis property in January 2000, explaining that the deed would
only be filed to convey L.J.’s interest if L.J. died. Ryerson later completed
the blank deed, making it appear that L.J. had conveyed to Ryerson a one-half
interest in the Minneapolis property. Respondent notarized L.J.’s signature
although he did not actually witness her sign the deed. The deed was recorded
on November 29, 2001, without L.J.’s knowledge or consent. Respondent and
Ryerson rented out the Minneapolis property from December 1999 to January 2003,
the proceeds from which were to be used to pay the mortgage.

In September 2001, respondent drafted a contract for
deed conveying the Minneapolis property in its entirety from Ryerson to respondent’s
father for $1,200,000. The contract for deed bore the forged signature of
respondent’s father. Respondent and Ryerson used the contract for deed to
secure a mortgage loan on the property to respondent’s father, with respondent
misrepresenting to the mortgagee that his father had made regular payments
under the contract for deed. Although respondent’s father never authorized respondent
to act on his behalf in relation to the Minneapolis property, respondent signed
the mortgage documents purporting to be his father’s attorney-in-fact.

The second mortgagee foreclosed on the Minneapolis
property in October 2002. When L.J. contacted Ryerson upon receipt of the
foreclosure pleadings, Ryerson told L.J. that she and respondent had obtained refinancing
and that there was no reason for concern. Respondent later informed L.J. that
a buyer had been found and that her investment would be repaid out of the sale
proceeds. On January 16, 2003, respondent directed L.J. to sign a quit claim
deed transferring her interest in the property to Ryerson. On the same day, respondent
and Ryerson conveyed the Minneapolis property by warranty deed to respondent’s
father, using the mortgage loan obtained with the September 2001 contract for
deed to fund the purchase.[2]
At closing, Ryerson received more than $955,000 as the “payoff” on the contract
for deed to respondent’s father. It has been deemed admitted that “the
contract for deed was a sham transaction” used, together with the quit claim
deeds, “to divest [L.J.] of her interest in the property.” Although L.J. had
invested more than $197,000 in the property, respondent and Ryerson paid her only
$132,388.07 for her “interest” in the September 2001 contract for deed. Ryerson
subsequently directed respondent’s father to sign a blank quit claim deed of
the Minneapolis property, which Ryerson completed to transfer ownership of the
property to Mark O’Brien, the same third party who had purchased the Mound
property.

Ensuing Litigation and
Disciplinary Action

L.J. brought an action against respondent, Ryerson,
and Mark O’Brien in 2004, seeking recovery of the Mound and Minneapolis
properties and damages for fraud and breach of fiduciary duties. As a result
of a June 2005 settlement agreement among respondent, Ryerson, and L.J., respondent’s
father reconveyed the Minneapolis property to L.J.

Charges of unprofessional conduct were issued against respondent
on January 22, 2007, and a panel of the Lawyers Professional Responsibility
Board found probable cause for public discipline. Pursuant to the panel’s
direction, the Director filed a petition for disciplinary action dated May 24,
2007, and respondent admitted service of the petition on June 1. Respondent’s
answer was due 20 days after service of the petition under Rule 13(a), Rules on
Lawyers Professional Responsibility (RLPR). He failed to file an answer by the
deadline, and the Director alleges that respondent was notified twice, once by
telephone, that his answer was overdue. The Director moved for summary relief
on July 20, and we granted the Director’s motion, ordering that the allegations
in the petition be deemed admitted. See Rule 13(b), RLPR. On July 31, respondent
filed an answer, in which he generally denied or disclaimed knowledge of most
of the allegations in the petition, and also filed a motion for extension of
time to answer. The Director opposed respondent’s motion. In our order of
August 13, 2007, we construed respondent’s motion as a motion to vacate the order
for summary relief, and we denied the motion.

I.

An attorney against whom a petition for disciplinary action has
been filed has 20 days after service of the petition to file an answer. Rule
13(a), RLPR. If the attorney fails to file an answer within the 20-day period,
the allegations in the petition “shall be deemed admitted.” Rule 13(b), RLPR.
Respondent filed his motion to vacate and proposed answer after we had granted
the Director’s motion for summary relief and more than eight weeks after respondent
was served with the petition. Neither respondent nor the Director cites any
authority for vacating, over the objection of the Director, an order of this
court deeming facts to be admitted as a result of a failure to answer in a
timely manner.[3] In addition to failing to offer a credible explanation for his
delay, respondent’s proposed answer is effectively a general denial and
provides no response to the detailed and disturbing facts alleged by the
Director. Under these circumstances, we decline to vacate our order for
summary relief, and we accept the facts as stated in the Director’s petition as
controlling.

II.

Because we have ordered that the allegations in the Director’s
petition be deemed admitted and there is no basis for vacation of that order,
the only issue before us is the appropriate discipline to impose. Respondent requests that any discipline imposed be limited to no
more than a two-year suspension. The Director recommends that the respondent
be disbarred. We agree with the Director.

The
purposes of imposing discipline for attorney misconduct are the protection of
the public, the protection of the judicial system, and the deterrence of future
misconduct by the disciplined attorney and other attorneys. In re De Rycke,
707 N.W.2d 370, 373 (Minn. 2006). Punishment of the attorney is not a goal of
the disciplinary process. In re Wyant, 533 N.W.2d 397, 401 (Minn.
1995). We consider four factors in determining the appropriate disciplinary sanction:
“ ‘1) the nature of the misconduct, 2) the cumulative weight of the violations
of the rules of professional conduct, 3) the harm to the public, and 4) the
harm to the legal profession.’ ” De Rycke, 707 N.W.2d at 373-74
(quoting In re Oberhauser, 679 N.W.2d 153, 159 (Minn. 2004)).

Minnesota Rule of Professional Conduct 8.4(c) states
that “[i]t is professional misconduct for a lawyer to * * * engage in conduct
involving dishonesty, fraud, deceit, or misrepresentation.” We conclude that respondent
violated Rule 8.4(c) by converting to his own use rental payments from the
Mound property that were supposed to be paid toward L.J.’s mortgage, converting
sale proceeds from the Minneapolis property that were due L.J., and inducing L.J.
to transfer her property interest in the Minneapolis property to Ryerson by misrepresenting
to L.J. that the property was being sold and that her investment would be
returned from the sale proceeds. This conduct is akin to the misappropriation
of client funds, which “usually merits the sanction of disbarment unless the
attorney presents clear and convincing evidence of substantial mitigating
circumstances which show that the attorney did not intentionally convert the
funds.” In re Swerine, 513 N.W.2d 463, 466 (Minn. 1994).

We conclude that respondent also
violated Rule 8.4(c) by misrepresenting to L.J. that he and Ryerson had
obtained refinancing for the Mound property, misrepresenting to
the mortgagee of the Minneapolis property that his father had made payments
under the contract for deed, fraudulently drafting the contract for deed for
the Minneapolis property, falsely notarizing L.J.’s signature on the quit claim
deed to the Minneapolis property, and signing the Minneapolis property mortgage
documents as his father’s attorney-in-fact without authorization to do so. See,
e.g., In re Samborski, 644 N.W.2d 402, 407 (Minn. 2002) (disbarring
attorney where “[i]n addition to misappropriating client funds, [the attorney]
made misrepresentations and gave false documents to clients to conceal the
misappropriation”). As in In re Graham, in which we disbarred an
attorney for misconduct that included the fabrication of documents, “[t]he
nature of respondent’s misconduct is rooted in dishonesty and deceit.” 503
N.W.2d 476, 479 (Minn. 1993).

We further conclude that respondent violated Minn. R.
Prof. Conduct 1.8(a) by engaging in business transactions with L.J., his
client, on unreasonable and undisclosed terms, without advising her in writing
to seek independent legal counsel, and without obtaining her written consent to
the transactions.[4]
Violations of Rule 1.8(a) “merit serious
disciplinary sanctions.” In re Olsen, 487
N.W.2d 871, 874 (Minn. 1992). In Wyant, for example, we disbarred an
attorney for borrowing over $1.4 million from clients for
his own benefit and for the benefit of his law firm and a corporation of which
he was a part owner. 533 N.W.2d at 398, 402. The financial condition of the
borrowers rendered the loans unreasonable, and the attorney failed to disclose
his adverse interests, advise his clients to seek independent counsel, or
obtain written consent to the conflicts of interests. Id. at 398-99.
Moreover, in In re Pearson we indefinitely suspended an attorney for, inter alia,
“entering into a business transaction with a client without disclosing conflicting
and/or differing interests.” 352 N.W.2d 415, 419 (Minn. 1984).

Viewed in its totality, respondent’s misconduct is similar to that
of the attorney in In re
Peterson, 456 N.W.2d 89 (Minn.
1990). In Peterson, we disbarred an
attorney who induced his client, a 20-year-old who had sustained serious head
injuries, to lend $100,000 to the attorney’s real estate company. Id.
at 90-91, 93. The attorney’s conflict of interest was not disclosed, the terms
of the transaction were unreasonable, and the attorney did not discuss the
arrangements with the client’s parents. Id. at 90. The attorney also
made false representations to third parties and forged the signatures of bank
officers on a document. Id. at 91-92. As in Peterson, “the
nature and cumulative weight” of respondent’s misconduct lead us to conclude
that disbarment is warranted. Id. at 93.[5]

We
reject respondent’s attempt to blame Ryerson for his wrongdoing. In Wyant,
the attorney disclaimed responsibility for the loans his clients made to his
law firm and to his corporation, blaming his business partner for the
improprieties. 533 N.W.2dat 398-99. We found the attorney’s “attempt
to shift the blame to his partner * * * unpersuasive,” emphasizing that the
fact that the attorney’s partner “was more directly involved in the
solicitation and execution of the loans * * * does not absolve [the attorney]
for his own involvement.” Id. at 401. We noted that the attorney “was
present at some point in some of the discussions * * * regarding the loans” and
was aware that the terms of the loans were unfair and that the necessary
disclosures had not been made. Id. at 398-400. Similarly, under
respondent’s theory, even if Ryerson is more culpable than respondent, that
greater culpability does not absolve respondent of responsibility for his misdeeds
committed in concert with her. Even apart from his cooperation with Ryerson, however,
respondent himself made misrepresentations to L.J. and to the mortgagee of the
Minneapolis property, falsely notarized L.J.’s signature, and obligated his
father under a mortgage without authorization. In the aggregate, respondent’s
violations of the rules of professional conduct clearly warrant disbarment.[6]

III.

An
attorney’s “failure to answer the petition with any
mitigating circumstances bars our consideration of such issues.” In re Ladd,
463 N.W.2d 281, 283 (Minn. 1990). Respondent did note at oral argument that he
has never previously been subject to disciplinary action, and lack of
disciplinary history can be a mitigating factor in a disciplinary proceeding. See,
e.g., In re Hanvik, 609 N.W.2d 235, 241 (Minn. 2000). But even if
we were to take respondent’s claim into account, “lack of previous discipline
alone will not mitigate severe misconduct.” In re Pugh, 710 N.W.2d 285,
289 (Minn. 2006).

Therefore, we order that respondent Michael F. Swensen
be, and hereby is, disbarred.

[1] A separate petition for disciplinary action
was filed against Ryerson on July 17, 2007. We express no opinion here as to
whether Ryerson’s actions violate the rules of professional conduct.

[2] The petition filed by the Director
suggests, but does not specifically state, that the mortgage loan used to fund
the purchase was the loan obtained with the contract for deed.

[3] This case is distinguishable from In re
Wood, in which we granted an attorney’s request to file an answer after we
had ordered that the allegations in the petition be deemed admitted, because in
Wood the Director did not oppose the attorney’s request. In re Wood,
716 N.W.2d 341, 344 (Minn. 2006).

(a) A lawyer shall not enter into a
business transaction with a client or knowingly acquire an ownership,
possessory, security, or other pecuniary interest adverse to a client unless:

(1) the transaction and terms
on which the lawyer acquires the interest are fair and reasonable to the client
and are fully disclosed and transmitted in writing in a manner that can be
reasonably understood by the client;

(2) the client is advised in
writing of the desirability of seeking and is given a reasonable opportunity to
seek the advice of independent legal counsel on the transaction; and

(3) the client gives informed
consent, in a document signed by the client separate from the transaction
documents, to the essential terms of the transaction and the lawyer’s role in
the transaction, including whether the lawyer is representing the client in the
transaction.

[5] We recognize that client vulnerability,
which was a factor in the Peterson analysis, is not present here. See
Peterson, 456 N.W.2d at 90-91, 93. But this difference is not dispositive,
as the absence of client vulnerability in this case does not excuse
respondent’s grievous misconduct.

[6]We also note that many of the
allegations, now deemed admitted, against respondent involve serious misconduct
that is in no way dependent on the existence of an attorney-client
relationship. “We have held in the past that a lawyer’s ethical obligations
are not limited to actions occurring in the practice of law, but extend to
business dealings unconnected with the practice of law.” In re Pugh,
710 N.W.2d 285, 289 (Minn. 2006).